Asymmetric Network Interconnection

CRNEC Working Paper February 2001

24 Pages Posted: 12 Apr 2001

See all articles by Julian Wright

Julian Wright

National University of Singapore (NUS) - Department of Economics

Michael Carter

University of Canterbury - Economics and Finance

Date Written: February 2001

Abstract

We develop a model of competition between interconnected networks, that allows for carriers to differ in size. Under two-part pricing, we show that because of asymmetry the larger network will always prefer a reciprocal interconnection charge be set at cost. For sufficiently large asymmetry the smaller network will have the same preference. The results suggest a particularly simple regulation can achieve desirable outcomes - if carriers cannot agree on the terms of interconnection, the larger carrier is entitled to select the access price which is then applied reciprocally.

Keywords: Networks, Interconnection, Telecommunications, Reciprocity

JEL Classification: D41, K21, L41, L43, L51

Suggested Citation

Wright, Julian and Carter, Michael, Asymmetric Network Interconnection (February 2001). CRNEC Working Paper February 2001, Available at SSRN: https://ssrn.com/abstract=262341 or http://dx.doi.org/10.2139/ssrn.262341

Julian Wright (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

AS2 Level 6, 1 Arts Link
Singapore 117570
Singapore
6568743941 (Phone)
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HOME PAGE: http://profile.nus.edu.sg/fass/ecsjkdw/

Michael Carter

University of Canterbury - Economics and Finance

Private Bag 4800
Christchurch
New Zealand

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